Considering the negative sentiments mounting in China amid the declines in HRC futures prices, Chinese suppliers have kept aggressively decreasing their hot rolled coil (HRC) prices in new deals and offers, putting the global HRC market under continuous negative pressure. Specifically, while Chinese suppliers have managed to sell sizable volumes at lower levels to Turkey and Vietnam, Asian exporters like those from Taiwan and South Korea, and also suppliers from Egypt, have succeeded in concluding new sales to Europe. Furthermore, more deals for ex-India HRC have been heard in the Middle East at lower price levels this week.
This week the decreasing trend of HRC futures prices in China together with the weaker local market have made Chinese HRC exporters even more aggressive in decreasing offers this week. Thus, export offers for boron-added SS400 HRC from the large major Chinese mills are at $550-570/mt FOB, for July shipment, with a midpoint at $560/mt FOB, losing another $12.5/mt over the past week. At the same time, smaller mills and traders in China have decided to go lower as well, and, thus, the tradable level for ex-China SS400 HRC has decreased by $10/mt on average to $525-535/mt FOB on Tuesday, May 23, while by Friday, May 26, the tradeable prices have dropped to $510-520/mt FOB in several big deals to Vietnam at $530/mt CFR and to Turkey at around $560/mt CFR. In the SAE1006 HRC segment, Chinese suppliers have also been bearish, but very few deals have been confirmed so far. For instance, offers for SAE1006 HRC from Chinese traders to Vietnam have dropped to $560/mt CFR from $560-570/mt CFR at the beginning of the week and versus $590-600/mt CFR last week. Domestic HRC prices in China have settled at RMB 3,730-3,920/mt ($527-554/mt) ex-warehouse on May 25, with the average price level RMB 120/mt ($17/mt) lower compared to that recorded on May 18, according to SteelOrbis’ data.
In Vietnam, prices for import HRC have continued to plunge this week given more aggressive offers from Chinese suppliers. Specifically, this week has started with sharp decreases in HRC prices from Chinese traders for Vietnam, with offers for ex-China SS400 HRC on Monday, May 23, at $540/mt CFR, down by $10-15/mt week on week, while several deals were reported at $538/mt CFR. However, while by the middle of the week sources have reported some fresh ex-China SS400 offers at $532-535/mt CFR, by the end of the week, new deals have been heard at $530/mt CFR and slightly below level. Offers for ex-China SAE1006 HRC have been reported at $560/mt CFR, versus $590-600/mt CFR last week, with no deals have been reported so far though. The SteelOrbis’ reference price for imported SAE1006 HRC in Vietnam, has come to $560-590/mt CFR, compared to $590-600/mt CFR last week, with the lower end of range corresponding to the cheapest ex-China offers and with the higher end to the targeted level for ex-Japan coils, which have been offered at around $605/mt CFR.
Ex-India HRC prices have continued to drop as sellers have attempted to push overseas sales, facing rising competition in all major outlets, resulting in ex-India SAE1006 2 mm HRC coming to $575-620/mt FOB, down by $22/mt on average compared to $590-650/mt FOB a week ago. The lower end of the range corresponds to offers and some small sales to the MENA region, while the higher end reflects offers to Europe, which have been corrected more visibly over the past week. Among the limited trades confirmed in the market was a deal for 12,000 mt for delivery to the UAE by an eastern India-based mill at $588/mt FOB, which translates to up to $625/mt CFR. The same mill is also heard to have concluded a trade for 8,000 mt for Qatar at a low price of $575/mt FOB, but it was not confirmed by the seller or buyer.
In Turkey, HRC pricing continues to be driven by China and its aggressive offers and generally slow business activities due to the local currency and banking issues together with the impact of the election. Early this week, China dropped its HRC offers to Turkey by around $20-25/mt to $560-568/mt CFR for Q195 grade, while some traders, according to sources, had earlier reduced prices to $550-555/mt CFR. Closer to the end of the week, there has been information about total sales of 40,000 mt at $555-560/mt CFR - to a steel mill and to a re-roller. However, some of market sources consider the deal for the main part of the volume to not have been closed yet. Moreover, as of today, offers for ex-China HRC have inched up to $570-575/mt CFR for the mentioned grade and even slightly above. Given the price situation in China during the week, Turkish mills have decreased their local HRC prices in a few steps by $10-15/mt to $660-680/mt ex-works. As regards exports, the official price levels for ex-Turkey HRC are at $650-660/mt FOB, but EU buyers report $620-630/mt FOB levels are achievable from some mills and for decent volumes. In the import segment, aside from China, there is no interest in other origins given their uncompetitive pricing. India is the closest with $600-620/mt CFR offers, with no negotiations reported.
European HRC producers have been forced to drop their offers again this week given the impossibility of competing with decreasing import HRC prices. Thus, HRC offers from European mills have been evaluated at €700-770/mt ex-works, versus €750-780/mt ex-works last week. The lower end of the range corresponds to the tradable price level for HRC in Italy, while offers from mills have been heard at €720-750/mt ex-works, compared to €750/mt ex-works last week. Meanwhile, customers in northern Europe estimate the workable prices at around €750-760/mt ex-works, down by €10-20/mt week on week. At the same time, import offers to southern Europe have settled at around €590-640/mt CFR, versus €590-660/mt CFR last week, depending on the origin and destination. The lower end of the range corresponds to ex-Vietnam offers heard at €590/mt CFR Italy, the same as last week. Meanwhile, according to market insiders, a deal for ex-Taiwan HRC has been signed in Spain at €620-625/mt CFR, compared to offers at around €645/mt CFR last week. Besides, several deals for around 80,000 mt in total of ex-Egypt HRC are reported to have been done at €625/mt CFR southern Europe, versus offers at €630/mt CFR last week. Offers for ex-South Korea HRC have been voiced at €620/mt CFR Spain, down by €30/mt week on week. Besides, sources said a deal for 20,000 mt of ex-South Korea HRC has been done to Italy at €606/mt CFR this week. Furthermore, import offers in northern Europe have been voiced at €620-640/mt CFR, compared to €620-670/mt CFR last week, with most offers coming from Asia.
In the UAE, despite end-user demand still being weak, Emirati buyers have continued to purchase modest amounts as import offers have continued to go down. As a result, 12,000 mt of ex-India HRC have been sold to the UAE at around $625/mt CFR for June shipping, while previous offers for HRC were at $630/mt CFR. Chinese offers, meantime, have remained mostly stable from last week, with traders giving lower offers at around $570-575/mt CFR, while Chinese mills are trying to get higher levels of about $605-615/mt CFR UAE for June-July shipment. Moreover, South Korea, which had previously offered at prices at $670-680/mt CFR, has also opted to withdraw its offers at $635/mt CFR for June-July shipment.